TTB Annual Report 2008
TTB Annual Report 2008
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TABLE OF CONTENT
Financial Highlights Vision, Mission & Values Corporate Information Board of Directors and Executive Committee Members Message from The Chairman Message from The Managing Director Summary Overview 2008 Significant Facts Corporate Banking Commercial & Consumer Banking Institutional Banking Retail Banking & Funds Transfer Services Corporate Governance & Ethical Conduct Report of the Directors Report of the Independent Auditors The Financial Statements Income Statement Statement of Recognised Income and Expense Balance Sheet Cash Flow Statement Notes to the Financial Statements TTB Network (Branches)
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37 37 38 39 42-78 79
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FINANCIAL HIGHLIGHTS
For the year (Cedi million) Total Income Net Operating profits1 Profits before tax Net Profits At year ended (Ghana Cedi Million) Shareholders Funds Total Deposits Total Assets Rates (%) Capital Adequacy2 Cost to Income (Excl. Depreciation) Return on average Equity Per Ordinary Share (GH) Dividend Earnings Notes:
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2003 8.72 4.58 3.59 1.94 2003 4.73 39.17 62.43 2003 11.10% 47.40% 46.10% 2003 0.09 0.19
2004 13.12 7.03 5.95 3.71 2004 7.15 50.90 89.79 2004 12.61% 43.80% 62.50% 2004 0.13 0.37
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2005 15.42 7.93 6.79 4.53 2005 10.09 57.09 98.24 2005 12.07% 43.80% 52.50% 2005 0.16 0.45
2006 19.06 9.02 7.80 5.61 2006 13.74 70.83 123.04 2006 13.28% 49.92% 47.05% 2006 0.20 0.56
2007 25.76 16.59 10.47 8.01 2007 21.75 109.77 220.79 2007 11.95% 52.00% 46.80% 2007 0.20 0.80
2008 37.37 16.06 13.13 9.56 2008 29.40 123.31 253.01 2008 11.75% 53.00% 38.96% 2008 0.96
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OUR VISION
To be the leading financial service provider in our target markets. To provide flexible financial solutions tailored to our customers needs. To think globally, act locally combining the various strengths of our network partners & shareholders.
OUR MISSION
To grow, manage and protect customers business & financial assets. To serve the customer better and faster. To conduct business in an ethical & responsible manner. To create sustainable shareholder value.
OUR VALUES
To be reliable, today and tomorrow. To be listening & responsive. To be innovative & efficient. To be transparent & honest.
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CORPORATE INFORMATION
Board of Directors:
Albert D. Osei Isaac Owusu-Hemeng Thompson Kuduo Abu-Bakr Bibilazu B. A. M. Zwinkels W. O. Agbenyega Michael Jacquemin Kojo Okai Andah (Chairman) (Managing Director)
Secretary:
Charles Obeng-lnkoom
Auditors:
Deloitte & Touche Chartered Accountants 4 Liberation Road P. O. Box GP 453 Accra
Solicitors:
Bentsi-Enchill, Letsa & Ankomah Legal Practitioners 1st Floor, West Wing Teachers' Hall Annex 4 Barnes Close P. O. Box 1632 Accra
Registered Office:
Reinsurance House 68 Kwame Nkrumah Avenue Adabraka Accra
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BOARD OF DIRECTORS
Ben A. M. Zwinkels
William Agbenyega
Michel Jacquemin
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Albert D. Osei
Chairman
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This put severe upward pressure on local interest rates. Indeed the Bank of Ghanas Monetary Policy Committee increased its prime rate from 13.5% to 17% during the year in an effort to stem these inflationary pressures. This in turn persuaded the universal banks to increase both their average base rate quotations and their average lending rates in tandem. Instructively, strong credit from both the public and private sectors, accompanied by a deteriorating balance of payments position weakened the cedi, considerably in 2008. During the year the cedi depreciated faster against the major international trading currencies the US dollar, the Euro, the British Pound and the Japanese Yen than at any other time since the year 2000.
resulted in increased domestic debt issuance at shorter maturities, as rising inflation has shortened investors horizons, raising roll-over risks. Currency translation losses have persuaded foreign investors to disinvest from the Ghana Stock Exchange and local investors have followed suit as equity prices fall in result, and conversely, yields on money market fixed interest instruments rise in consonance with inflation. However, the lessons of the global credit crunch with regards to ill-advised lending, coupled with the deteriorating economic environment for borrowers in Ghana have combined to make Ghanaian banks more cautious about lending, despite still strong demand for bank credit, as the associated credit risks increase. The Bank of Ghana has adopted a risk-based approach to banking supervision and your bank is adapting to this, with a view to ensuring that it prudently assesses and handles the rising risk levels involved in our core business. Another challenge that now confronts your bank is that of meeting the first new minimum capital level set by the Bank of Ghana of GH25 million by the end of 2010 and the ultimate one of GH60 million before the end of 2012. Our merger with Merchant Bank Ghana which has the same majority shareholder Social Security and National Insurance Trust will be consummated this year and this will go a long way towards ensuring that we meet the new minimum capital requirement, but will also position us as a truly universal bank. The merger of an erstwhile commercial bank (as was the case of TTB) and an erstwhile merchant bank will create a financial institution that can properly exploit the vast opportunities created through both widening the combined product range and also, deepening our ability to take advantage of larger opportunities. Importantly it will greatly enhance our capabilities in earning fee-based income as fund-based activities
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Isaac Owusu-Hemeng
Managing Director
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Economic Environment
In 2008, the Ghanaian economy came under intense pressure from deteriorating economic circumstances on both the global and local fronts. The global credit crunch assumed an alarming proportion ushering in an economic recession in the developed world. Though the immediate impact to developing countries like Ghana is yet to be fully felt, the macroeconomic indicators at the close of the year were not very favourable. These problems were exacerbated by fiscal slippages, a worsened external current account and budget deficits, with adverse consequence on the cedi exchange value and rising inflation. The overall fiscal deficit hit a high of 14.8% (or 11.5%, including divestiture proceeds) of Gross Domestic Product in 2008 and the current account deficit was even higher at about 20% of GDP, the latter fuelled by a widening trade deficit and dwindling inward remittances. These trends, in turn, put pressure on both the cedi and on gross international reserves. As a result of these negative factors, the cedi experienced its sharpest depreciation since 2001, falling by 20.1% against the US dollar, 16.3% against the euro and 8.1% against the pound sterling. Gross international reserves went down sharply by the close of the year - down from 3.1 months import cover at the end of 2007 to 1.8 months of import cover by the end of 2008.
Competitive Environment
The Ghanaian banking industry saw a much intensified form of competition last year, as the hitherto new banks literally gained their feet and deepened their operations on all fronts. There were 2 additional banks, with the entry of BSIC and Bank of Baroda during the year, bringing the total number of players to 25. The combined effect of these factors was a very keen kind of competition that was new to the industry as the demand for cutting-edge technology and quality human resources for providing the desired banking solutions increased tremendously. At the other extreme end was customer sophistication, which became progressively more evident as customers began setting the grand rules of the game by being more demanding than ever, and also being selective in their choice of products and services. The above notwithstanding, TTB stayed focused and met both challenges by intensifying its Customer Relationship Management (CRM) practices and also improving its Customer Service and Care initiatives. These indeed, propelled the bank to exceeding its targets for the year under review.
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challenges, I am happy to report that the Bank achieved significant growth in income and profits and a commendable expansion in the size of its balance sheet. For the 2008 financial year, the banks total income grew by 45% to reach GH37.37 million. As you might have expected, the intense levels of competition within the industry, coupled with our own strategic drive to selectively expand our delivery channels and also widen the range of products and services on offer to our esteemed customers put pressure on our operating expenses which rose by 47.4% to GH19.58 million in 2008. As a bank that focuses principally on SME financing, it was not unexpected that in periods of harsh economic circumstances, the loan book should experience greater impairment. However, as a result of prudent lending and robust risk management practices, the loan loss provisions were contained within acceptable norm. Thus, we ended the year with an impressive pre-tax profit of GH13.13 million, up by 25.45% over the previous years. However, after making a substantial provision for income tax expense the net after tax profit was up by19.4% increase, from GH8 million in 2007 to GH9.56 million in 2008. The bank experienced a significant growth in 2008, with total assets up 14.6% to reach GH253million propelled by a 50.3% increase in loans and advances, which stood at GH161.9 million by the end of 2008. Shareholders funds also experienced strong growth of 35.2% in 2008 to reach GH29.4 million. TTBs financial performance for 2008 evidenced the banks strong resilience to shocks from both domestic and external fronts which in turn reflects management successes in pursuing its key strategic thrusts, namely, achieving excellent customer service at profitable levels, sound risk environment, cost efficient operations by leveraging on the banks ICT systems &
infrastructure, a cost-conscious mindset and a performance-based culture underpinned by a reward system to ensure attraction and retention of best talents
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to beneficiary institutions and organizations. The bank disbursed GH40,000 to various organizations and institutions in 2004, GH47,000 in 2005, over GH70,000 in 2006 and GH129,443 in 2007. Last year, TTB provided reading books and teaching aids worth a total of GH48,000 to twelve deprived public basic schools spread across the Greater Accra, Ashanti and Central Regions. The bank also donated GH10,000 to the Maternity Ward of the Korle-Bu Teaching Hospital in Accra, GH5,000 to the Ghana Society for the Blind among other corporate donations and sponsorships, which also summed up to about GH40,000. Total disbursements to needy institutions for 2008, therefore, totaled some GH103,000.
the total outlets to 17 and this will be further increased to 20 by midyear. We are currently in discussions with a number of technology/telecommunications companies seeking collaborations to bring more convenience to our customers by introducing new electronic payment systems that will enable cell phone users to shop, top-up phone units, transfer funds to third parties and pay bills using their mobile phones. For the year under review, TTB was able to deploy the platform that allows customers to check their account balances and view last 4 debit or credit transactions via SMS messages. That same platform also makes it possible for customers to receive SMS prompts on any transactions that hit their accounts in Real-Time. An area of priority for 2009 is human resource development. The bank is acutely conscious of the fact that behind its outstanding performance are its employees who serve as the product architects and engineers as well as those who provide the delivery channels to meet the current and future needs of our banking public. TTB therefore remains totally committed to ensuring that we secure and retain the best talents and give them the right motivation so as to ensure their retention. Going forward, TTB is gearing itself to meet the new minimum capitalization level set by the Central Bank by 2012 and the preferred strategic vehicle chosen is by way of a merger with Merchant Bank Ghana. Under an agreed road map with the transaction advisors, the merger is expected to be consummated by mid-year 2009, baring any unforeseen developments
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Exchange Rate
The performance of the cedi against the US dollar especially in the year 2008 recorded its worst rate of depreciation in eight years. At the end of the year it had fallen by 25.7% which compares unfavourable to the performance the same period in previous year of 3.9%. Not too long ago the Cedi was considered safe to hold as a store of value and therefore a good instrument for investment. But since the last month of year 2008, that high level of confidence has waned dramatically with people holding large stocks of the Cedi converting it especially in favour of the US dollar. The situation is no different with the performance of the Cedi against the EURO as it dropped by 20.3% at end of 2008(previous year 16.2%). However, the cedi has appreciated against
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GBP at Dec08 by 8.8% against a depreciation of 9.15% for the same period in previous year which is a reflection of weakening of GBP on the international front.
2008 Performance
The Bank performed within its strategic frame work in the year 2008 as it sought to achieve all targets set for the year. The year 2008 has been particularly challenging to the Banking Industry as most banks had to deal with the trickledown effect of the Global financial crisis and rising rates on domestic market. The ever increasing demand for higher rates by wholesale depositors coupled with the occasional liquidity crunch on the money market were among others, some of the challenges faced by TTB during the year. The Bank however continued to focus on its core competences as outlined in the current business plan in order to curtail competitive pressures and achieve the expected performance. The highlights of TTBs strategic priorities carried out in the year are as follows: Becoming a more market driven and customer focused financial services provider rendering excellent Customer Services at Profitable income levels Continue to pursue the aggressive retail drive to increase cheaper sources of funds To continue to improve on our Risk Management Systems. To fully utilize our Information and Technology platform. To continue to pursue a Cost Conscious Mindset. To reinforce a performancebased culture
income for the year increased by 46% from GH25.6million to GH37.4 million, and a corresponding increase in operating expenses of 44% accounted for the results booked in the year. This performance was due to normal operating activities of the bank and no capitals gains were made in the year 2008 as was the case in the previous year. By this performance, the Bank generated an annualised return on average equity of 46% at the end of the year 2008 which is about 1% less than the performance of previous year.
Operating Expenses
Total operating expenses for the period increased by 44% to GH19.3 million. TTB was able to slightly outperform the Cost to Income Ratio target of 54.95% by achieving 52.67% at the end of the year 2008.
Profitability
The Year 2008 posted an after tax profit of GH9.56million which represented a growth of 18% over the performance of previous year 2007. Total
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Balance Sheet The balance sheet of the Bank expanded by 8% over the previous year. Growth in loans and advances of 51% over the previous year were as expected, although during the last quarter of the year an accelerated growth in Government bills was initiated to take advantage of the rising interest rates. The year ended with a 12% growth in Bills. Total gross Loans &
Advances formed 67.9% of total balance sheet size which is higher than the achievement of previous year by 50%. The year recorded a 12% growth in deposits whilst, other borrowings grew by 53%. Shareholders funds of GH29.1 million which includes, Statutory and other Reserves have grown by 47% over the year; this has been solely due to the net profit of the Bank posted for the year 2008.
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SIGNIFICANT FACTS
Strategic Positioning: Moving Ahead Of The Competition
The year 2008 marked the second year for the implementation of the banks second 3-year rolling plan, having successfully implemented the first phase (first third) in the previous year with exciting results. The prime ambition of positioning the bank as a preferred specialist bank through the provision of excellent quality customer service to customers, be they Individuals, identifiable Professionals or Business entities was taken to new heights. We focused our energies and resources on further deepening existing relationships with our core target markets and this further strengthened the position of the bank as a preferred SME bank. Great efforts and resources were therefore, put in training the right calibre of staff to revitalise their selling and marketing skills to keep them ahead of the competition. It is no wonder therefore that the bank has, once again, accurately and in sync with recent trends, met the expectations of stakeholders, the key being customers and shareholders in terms of value addition over the period. The banks corporate objectives for the period were achieved through: Excellent customer service delivery through effective segmentation: Quality service delivery has been the most potent weapon in the arsenals of TTB and we persistently build on this as a way of ensuring continuous service improvements to customers in our chosen markets. We do this by identifying existing market needs and tailoring our products and services to meet these needs at all times. In doing so, we always ensure that the Service Delivery Value far exceeds the expectations of our customers and that is why customer delight remains the cornerstone of our business. It is this desire to delight customers that informed our decision to build our business along customer needs rather than geographical locations or product category and we achieved this through effective Market Segmentation, Market Targeting and Brand Positioning aimed at catching the attention of customers in both the Business-to-Consumer (B2C) and Business-to-Business (B2B) markets.
A Board Member being assisted by Management and Customers to cut the BANK OF THE YEAR 2007 Cake.
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The bank maintained its number of commercial divisions at 4, with each division still fashioned along homogeneous customer groups that is based on the existence of similarities in their banking needs. These divisions include: Corporate Banking, Institutional Banking, Commercial & Consumer Banking and Retail Banking & Funds Transfer Services. Our desire to continue expanding the Retail and ebanking businesses was supported by an increase in the number of channels for the convenience of our customers. These took the forms of physical branch presence as well as Technological products and services, including ATMs, E-Zwich, Internet banking (TTB Online), SMS banking etc. Impact of our lean operations mindset: Consistent with the above, the bank continued to operate under a kind of flat organizational chart that effectively eliminates unnecessary bureaucracy and ensures closer links between management and the rest of our staff for effective communications. Management also intensified its resolve to inculcating cost-consciousness in all staff of the bank. This was achieved by educating staff to see the need for drastic reduction in waste and non-productive costs. We progressed further the activity based management methodology as a tool for enhancing performance whilst controlling costs. Building robust and performing system infrastructures: Management kept to its word of investing in the training of staff to fully utilize the enhanced functionalities of the new ICBA banking software so as to improve the generation of fast, cost effective, reliable and efficient set of Integrated Management Information Systems (IMIS) reports for enhanced operational performance as well as accurate and more reliable measures for tracking customer & staff performances. The new applications software greatly
assisted our ability to introduce new electronic-based products, improved our capacity for service delivery and aided the provision of a sound risk management environment. Improving performance and risk management systems: The banks upgraded credit delivery and credit risk management systems over the years enabled us to continue to work at improving our capabilities in this direction in line with the Basel II accord. We have strengthened our systems to build the desired capacity for sound Integrated Management Information Systems to enable us meet the highest regulatory compliance standards. This, we hope, will boost our risk management systems and eventually result in reducing losses from errors, fraud, bad loans etc in the coming years. Building a performance based culture among staff and the risk/reward relationships: The strengthening of our performancebased culture among staff, underpinned by appropriate motivational packages and development programmes, with clear links also between actual performance and endof-year compensation continued in earnest. We continue to review our performance related reward schemes to keep them abreast with market trends and also to further challenge staff to continue to improve their performance levels.
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Bank and Amalgamated Bank as well as individual beneficiaries of inward remittances services. To continue striving for service excellence, TTB has constantly instituted several forms of customer loyalty schemes to serve as incentives to ensure business growth and prosperity. The bank has also ensured constant and regular training programmes for its own staff and also staff of the sub-agency institutions for the purpose of building customer delight at the point of sale. Enhancing foreign exchange mobilisation to support the banks trade finance business remains a prime objective of the Retail Banking & Funds Transfer Division. It is our desire to continue to employ the services of third party sub-agency institutions in addition to our own outlets to make it possible for many Ghanaians to enjoy the passionate service of TTB.
continue to make substantial investments in training and manpower development. Twenty (20) staff received overseas training during the year with 97 others going through a variety of local training programmes. The bank also organised numerous inhouse training programmes for 244 staff under the period. The year under review saw the bank organise special training programmes on Customer Relationship Management (CRM) for all Relationship Managers, Account Managers and Branch Managers. This was meant to give them the requisite skills for managing existing customers in a way that ensures the minimisation of customer attrition rates whiles, at the same time, prospecting for new clients. The bank has, in a similar way, made it an annual ritual to contribute to the National Service Scheme (NSS) by engaging the services of 29 national service personnel from 2004 to 2007 out of which 24 have been retained as fulltime employees. Seventeen (17) personnel are currently discharging their national service obligations with the various departments of the bank for the 2008/2009 service year.
TTB E-zwich team signing on enthusiastic students during E-zwich mass registration exercise at Legon
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CORPORATE BANKING
Our chosen market is the corporate and medium enterprises segment which is made up of the following: Multinationals / Internationals Domestic Corporates and Medium Enterprises Efficiency, flexibility and empathy remain as our brand. We passionately seek to delight our teeming clients through personalized relationship using our able business relationship managers at strategic locations. We think through issues jointly with our clients in order to arrive at solutions that best suit their purpose. Tesano Tema and Kumasi We continue to enjoy uninterrupted and efficient communication with all our branches through cutting-edge banking software. This has boosted our e-banking capabilities and affords our clients the ability to access and view their accounts in the comfort of their offices.
Our Strength
We pride ourselves as having the following: Very knowledgeable, relatively young and motivated staff whose sole objective is to delight our clients. Strong trade finance products and services. Strategic alliance with IFC to support trade and medium term finance financing. Relatively flat management structure which facilitates quick credit decisions.
Our Strategy
Our key objective is to build strong bonds with our customers and in the process we seek to thoroughly understand their business. This enables us to customize solutions to meet the specific needs of each client. Our focus being the well being of our business partners (clients), high quality customer service delivery has been the cornerstone of our relationships. Despite the economic downturn largely witnessed in 2008 and the drying up of foreign inflows, we have remained focused in continuing to provide medium to long term funds to core productive sectors of the Ghanaian economy namely; manufacturing, nontraditional export businesses, agro-processing, trade finance, ICT, education and other related services.
Strategic Merger
In order to achieve a balance sheet size thats consistent with Bank of Ghanas new bank capitalization levels, thereby ensuring that we meet the growing demands of our clientele, the bank decided to go into a merger with Merchant Bank Limited and we expect the deal to be concluded before the end of year 2009. This will strategically position the merged entity to facilitate the financing of larger ticket deals and to venture into areas that we have in the past shied away from in view of funding levels required. The bigger bank to be created will also have a lot more branches to ensure easy reach of a lot more customers. We will continue to expand our frontiers in the near future to areas where the merged bank is not currently present. Thus, strategic branch network expansion will be pursued vigorously to satisfy our growing clientele base.
Our Locations
In order to provide a more congenial atmosphere, we have moved the corporate banking department of the Bank to the NTHC building Martco House just behind the Head Office Building. To be within easy reach of our increasingly growing client base we have also set up corporate desks at the following branches: Accra Main Post Office
Strategic Partnerships
TTB continues to forge ahead through strategic partnerships with major global financial institutions.
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With the active collaboration of the Dutch Finance Institution FMO and SIFEM, (Swiss Investment Funds for Emerging Markets), we have since 1998, provided medium to long-term funds especially to the SME Sector. In conjunction with the International Finance Corporation (IFC), TTB developed two products in 2006 and 2007. In 2006, TTB/IFC developed a schools finance scheme that enabled basic private schools obtain medium term local currency financing for capacity expansion. In 2007, TTB/IFC implemented a trade finance facility which has enabled our clients to establish L/Cs to beneficiary countries and regions which hitherto were difficult to trade with. The facility affords us the opportunity to establish deferred L/Cs up to thirty six months. Our business development efforts have taken new dimensions. We provide innovative financial solutions to suite the needs of organized trade associations without the need for collateral.
Trade finance Corporate governance Financial management and The e-zwich programme.
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Management:
Osei Asafo-Adjei +233 21 230422 [email protected] Ernest Obuobisa-Darko +233 30 701 28 53 [email protected] Rodney Saint Acquaye +233 21 252764 [email protected] Afia Serwaa Attrams (Mrs.) +233 30 701 14 90 [email protected] Baafuor Abankwa +233 21 252 763 [email protected] Kafui Dzameshie +233 30 701 07 58 [email protected]
Post Office:
Martin Nartey +233-21-673086 [email protected] Emmanuel Awuah +233-22-243558 [email protected] Nana Yaw Kootin-Sanwu +233-22-243558 [email protected] Nicholas Victor Agbenu 233-22-413619 [email protected]
Tesano:
Tema:
Kumasi: Joseph Acheampong +233-51-21417, 26045 [email protected] Elizabeth Lillian Owusu-Yeboah +233-51-24117, 26045 [email protected]
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The TTB Kiddies Account is a savings vehicle devised for our younger customers (0 18 years old). It is recommended for parents and guardians who wish to provide a nest egg for their children and wards by opening the account in their name and transferring the account to the child upon attainment of 18 years. Not only does this inculcate the savings habit into the child but ultimately helps secure their future.
Unique Proposition
Being completely in tune with the operations and needs of our valued customers, we design products that anticipate and decisively meet those needs. Our Import Clearing Facility, granted to both borrowing and non-borrowing customers, has been hailed by many of our customers for its responsiveness. This facility is designed for the payment of Import Duty, Freight and Part/Fullpayment of additional consignment of goods and patently aimed at the traders and importers among our customers.
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At Your Doorstep
Our Banking train chugs right to your door with our 17 branches / outlets located in the main commercial centres of Accra, Tema and Kumasi. Our services can be availed from Monday through to Saturday. Indeed, we are right on hand where, when and how you need us. TTB online same day ATM card Ezwich card and POS machines on-line request for statement, foreign exchange rate enquiry interest rate enquiry cheque book request and status of request funds tranfer to own and third party accounts Letter of Credit & Bank Guarantee Application cheque and IPC discounting Instant loans/overdrafts against cash/T-bills and many more
In Good Hands
The CCB team is made up of well-trained professionals with several years of relevant experience. We continue to invest in training and up skilling the team to build an improved knowledge and skills set. This ensures that our valued customers are served by people who know and can understand your peculiar needs and provide solutions that work for you.
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Management:
Tema:
Samuel Ofori-Antwi +233 - 22- 213705/6 [email protected] Kwadwo Kyei Gyeabour +233 -30- 7011576 [email protected] Sefa Dankwa +233 - 51- 21416 [email protected] Diana Opoku +233-51-21416 [email protected] Vincent Larbi Opare +233-51-80552 [email protected]
Tesano:
Business Centres: Accra: Alex Ashong +233-30-7011577 [email protected] Fred Amo Atakora +233-30-7011576 [email protected] Charlotte Amanquah +233-30-7011577 [email protected]
Kumasi:
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INSTITUTIONAL BANKING
Institutional Banking is a dedicated line of business for TTBs Wholesale Banking and Treasury Management. We offer a broad range of sophisticated, high quality products and services specifically designed to meet the financial needs of institutional clients. The Institutional Banking team in TTB drives the banks relationship with banks in and outside Ghana, non-bank financial institutions, discount houses, insurance companies, asset manage-ment companies, government institutions, non-governmental organizations, churches, associations and societies. Our focus is on the mid-market. FX Trading is another activity performed in the Treasury Unit. Treasury engages in the buying and selling of foreign currency from both customers and non- customers at very attractive rates.
Liquidity Management
Liquidity management ensures the right balance among assets, liabilities and funds flow. TTB offers a variety of liquidity management techniques. One of suct techniques is the sweeping call account, which allows you to sweep your cash overnight from your current account to a higher yielding account. This means on daily basis, after settling all payments on your accounts, excess funds are transferred to the sweeping call account as overnight investment on your behalf.
Operational Account
In the management of government project funds, we have developed payment systems (payroll management, bill payment services, direct debit payment facilities etc) to help create efficiency in payments administration and free our customers from rudimentary processes in catering for their administrative duties in their financial manage-ment processes.
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Fund Management
We have established a sound track record in the management of foreign and local funds for donor agencies, government project funds, international and local NGOs. We provide provident fund (PF) management services for customers employees. We manage the funds as a block investment or on individual staffs behalf. Customers funds are invested in accordance with the stated investment objectives all with the view to enhancing the relationship.
Credits
Short term loans and overdrafts to meet working capital requirements of financial institutions; guarantees and trade finance products all of which are carefully structured to meet the customers needs.
Advisory Services
We have a team of well trained staff who provide advice to support customers to achieve and sustain their business and investments objectives. We provide passionate solutions for our institutional clients.
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Management:
Florence Essel +233-21-240054 [email protected] Bassanio Kwame Gyebi +233-21-240054 [email protected] Abena Engmann +233-21-240054 [email protected] Kennedy Okai +233-21-230413 [email protected] Louisa Ampaw Appiah +233-21-240054 [email protected]
Contact: Justice Kwapong Kumi (Ag. Treasurer) +233-21-230413 [email protected] Carl Benjamin Hammond (Corporate Dealer) +233-21-230429 [email protected] Christopher Akrong +233-21-230413 [email protected]
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affairs of the company and any affiliated enterprise, as well as to assist the Executive Committee by providing advice. In discharging its role, the Board of Directors shall be guided by the interests of the company and any affiliated enterprise, and shall take into account the relevant interests of the company's stakeholders. The Board of Directors is responsible for the quality of its own performance.
company, taking into consideration the interest of stakeholders. It is responsible for compliance, for managing the risks, including internal risk management and control systems. It shall report related developments to and shall discuss the internal risk management and control systems with the Board of Directors and its Audit Committee. The Executive Committee shall ensure that all employees have the possibility of reporting alleged irregularities of a general, operational or financial nature to the Chairman of the Executive Committee (or to an official designated by him) without jeopardising their legal position. Alleged irregularities concerning Executive Committee members shall be reported to the Chairman of the Board of Directors.
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Operating income Profit before taxation From which is deducted: Tax liability Leaving a net profit after tax of Which is to be added to the income surplus brought forward from the previous year Making a total of Out of which is deducted: Dividend paid Transfer to other reserves Transfer to statutory reserve fund of Leaving a net balance on the income surplus account of
Principal activity
The principal activity of the Bank during the year and in accordance with Section 2 of the regulations of the Bank continues to be banking and finance. This represents no change from the activities carried out in the previous year.
Directors
The names of the directors who served during the year are provided at Page 4 of this report. No director or officer had any interest in the shares of the Bank. No director had a material interest, at any time during the year, in any contract of significance, other than a service contract with the Bank.
Auditors
In accordance with Section 134(5) of the Companies Code 1963. the auditors, Messrs. Deloitte & Touche continue in office as auditors of the Bank. On behalf of the Board
............................................... Director
......................................... Director
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Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the Bank has kept proper accounting records and the financial statements are in agreement with the records in all material respects and give in the prescribed manner, information required by the Companies Codes 1963, (Act 179) and the Banking Act 2004, (Act 673). The financial statements give a true and fair view of the financial position of The Trust Bank Limited as at December 31, 2008, and of its financial performance and its cash flows for the year then ended, and are drawn up in accordance with the Statement of Accounting Standards issued by the Institute of Chartered Accountants, Ghana and relevant International Financial Reporting Standards.
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ii.
iii. the balance sheet and income statements of the bank are in agreement with the books of accounts.
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ii.
iii. the bank's transactions are within its powers; and iv. the bank has complied with the provisions in the Banking Act 2004 (Act 673) and the Banking (Amendment) Act 2008 (Act 738).
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INCOME STATEMENT
Interest income Interest expense Net interest income Fees and commission income Fees and commission expense Other operating income Operating income Operating expenses Impairment loss Profit before taxation Income tax expense Profit after tax transferred to income surplus account Notes 7 8 2008 38,181,094 (14,189,303) 23,991,791 6,815,300 (62,383) 6,625,057 37,369,765 (19,683,755) (4,551,808) 13,134,202 (3,573,798) 9,309,573 9,560,404 2007 23,666,442 (6,828,088) 16,838,354 4,965,312 (87,847) 4,041,424 25,757,243 (13,356,929) (1,930,501) 10,469,812 (2,460,581) 250,831 8,009,231
9 10 11
12 14
16
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BALANCE SHEET
As at 31 December, 2008(All amounts are expressed in Ghana cedis) Assets Cash and balances with Bank of Ghana Treasury bills and other eligible bills Due from other banks Loans and advances to customers Investment in associated companies Property and equipment Intangible assets Other assets Taxation Notes 17 18 19 20 22 23 24 25 16 2008 26,867,806 23,410,056 25,107,618 161,912,902 202,000 2,867,945 1,133,089 11,490,289 14,327 2007 45,165,840 20,966,254 28,928,360 107,723,462 202,000 1,729,719 1,684,310 14,387,676 -
Total assets Liabilities Due to financial and other institutions Due to customers Other borrowed funds Interest payable and other liabilities Taxation Total liabilities Shareholders' fund Stated capital Income surplus Statutory reserve fund Other reserves Total shareholders' fund Total liabilities and shareholders' fund
253,006,031
220,787,621
26 27 28 16
32 31 33
The Board of Directors approved the financial statements on 20th March, 2009.
...... Director
Director
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TBs Corporate Social Responsibility covers the continuing commitment by the bank, to behave ethically and contribute to economic development while improving the quality of life of our staff and their families as well as the local communities within the banks catchment areas and society at large. These include those responsibilities which do not have financial returns but which are demanded of us under social contracts with our publics/stakeholders.
ur donations policy is tilted in favour of education, health, tradition & culture and sports. In the past few years, the bank has conscientiously discharged its corporate social responsibility obligations by donating in cash and kind to beneficiary institutions of all kinds from diverse backgrounds. The bank disbursed GH40,000 to various charitable organizations, ventures and projects in 2004, GH47,000 in 2005, GH70,000 in 2006 and a colossal GH129,443 in 2007.
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Deprived Public Basic Schools Ghana Society for the Blind Children's sponsored events Maternity Ward of Korle-Bu Culture and Tradition Rotary Club Ghana Future Ladies Golf Ass. Others Social Causes Total Representatives of the Maternity block of Korlebu Teaching Hospital receiving a cheque for GH10,000 from the Board Chairman, Mr. Albert D. Osei
ast year, the bank made donations of GH4,000 each to twelve (12) deprived public basic schools spread across the Greater Accra, Ashanti and Central Regions by providing reading books and teaching aids at a total cost of GH48,000. The bank also presented GH10,000 to the Maternity Ward of the KorleBu Teaching Hospital in Accra, GH5,000 to the Ghana Society for the Blind among other corporate donations and sponsorships, which also summed up to about GH49,649, bringing total disbursements for 2008 to about GH112,649.
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b. Basis of measurement
The financial statements are presented in Ghana cedis which is TTB's functional currency, rounded to the nearest thousand. They are prepared on the historical cost basis except for the following assets and liabilities that are stated at their fair values: financial instruments that are fair valued through profit and loss and financial instruments classified as available-for-sale. An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the bank is provided in note 42 to the financial statements.
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Interest income includes interest on loans and advances and placements with other banks, and is recognised in the period in which it is earned.
Government securities
Government securities comprise treasury bills and treasury bonds which are debt securities issued by the Government of Ghana. These are classified as available-for-sale and are stated at fair value.
Unquoted investments
Unquoted investments are stated at cost less impairment loss where applicable.
Depreciation
Depreciation on other property, plant and equipment is calculated to write off their cost or valuation in equal annual instalments over their estimated useful lives. The annual rates in use are: Computers 33% Motor vehicles 25% Furniture and fittings 20% Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
Leasehold land
Payments to acquire leasehold interest in land are treated as operating lease prepayments and amortised over the period of the lease.
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Computer software development costs recognised as assets are stated at cost less amortisation.
Amortisation is calculated on a straight line basis over the estimated useful lives not exceeding a period of 3 years.
Taxation
Current taxation is provided on the basis of the results for the year as shown in the financial statements, adjusted in accordance with the tax legislation.
Foreign currencies
Assets and liabilities expressed in foreign currencies are translated into Ghana Cedis at the rates of exchange ruling at the balance sheet date. Transactions during the year are translated at the rates ruling at the dates of the transactions. Gains or losses on exchange are dealt with in the income statement.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
Statutory reserve
IAS 39 requires the bank to recognise an impairment loss when there is objective evidence that loans and advances are impaired. However, Bank of Ghana prudential guidelines require the bank to set aside amounts for impairment losses on loans and advances in addition to those losses that have been recognised under IAS 39. Any such amounts set aside represent appropriations of retained earnings and not expenses in determining profit or loss. These amounts are dealt with in the statutory reserve. The provision for this additional impairment amounts is to be made only when impairment amounts provided under IFRS rules is lower than the figure to be provided under BoG Prudential Guidelines.
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Financial instruments
A financial asset or liability is recognised when the bank becomes party to the contractual provisions of the instrument.
Financial assets
The bank classifies its financial assets into the following categories: Financial assets at fair value through profit or loss; loans, advances and receivables; held-to- maturity investments; and available-for-sale assets. Management determines the appropriate classification of its investments at initial recognition.
Held to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that management has the positive intention and ability to hold to maturity. Where a sale occurs, other than an insignificant amount of held-to-maturity assets, the entire category would be tainted and classified as available for sale.
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Fair values of quoted investments in active markets are based on quoted bid prices. Equity securities for which fair values cannot be measured reliably are measured at cost less impairment.
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Renegotiated loans
Loans that are either subject to collective impairment assessment or individually significant and whose terms have been renegotiated are no longer considered to be past due but are treated as new loans. In subsequent years, the renegotiated terms apply in determining whether the asset is considered to be past due.
Financial liabilities
Debt and equity instruments are classified, as either financial liabilities or as equity in accordance with the substance of the contractual agreement. After initial recognition, the bank measures all financial liabilities including customer deposits and borrowings other than liabilities held for trading at amortised cost. Liabilities held for trading (financial liabilities acquired principally for the purpose of generating a profit from short-term fluctuations in price or dealer's margin) are subsequently measured at their fair values. Interest-bearing borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
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Contingent liabilities
Letters of credit, acceptances, guarantees and performance bonds are generally written by the bank to support performance by a customer to third parties. The bank will only be required to meet these obligations in the event of the customers default. These obligations are accounted for as off balance sheet transactions and disclosed as contingent liabilities.
Fiduciary activities
Assets and income arising thereon together with related undertakings to return such assets to customers are excluded from these financial statements where the bank acts in a fiduciary capacity such as nominee, trustee or agent.
Dividends
Dividends are charged to equity in the period in which they are declared. Proposed dividends are not accrued until they have been ratified at the Annual General Meeting.
Segmental reporting
A segment is a distinguishable component of the bank that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.
Comparatives
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
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Statements: Puttable Financial Instruments and Obligations Arising on Liquidation (effective from 1 January 2009); IFRIC 15 - Agreements for the Construction of Real Estates (effective from 1 January 2009) IFRIC 13 Customer Loyalty Programmes (effective 1 January 2009) IAS 39 - amendment - Financial Instruments: Recognition and Measurement - eligible hedged items (effective from 1 July 2009)
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For risk management reporting purposes, the bank considers and consolidates all elements of credit risk exposure.
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On- balance sheet items a) Government securities b) Deposits Due From financial Institutions - Local - Foreign
2008 GH 23,410,056
2007 GH 20,966,254
Gross loans and advances(including suspended interest) e) Other assets - Inter Bank Clearing Items - Other
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The bank does not perceive any significant credit risk on the following financial assets: Investments in Government securities and Bank of Ghana. Off balance sheet items
Neither past due nor impaired Past due but not impaired Impaired
2008 Neither past due nor impaired Past due but not impaired Impaired
Impaired loans
Impaired loans and securities are loans and securities for which the bank determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan / securities agreement(s). These loans are graded 3 to 5 in the banks internal credit risk grading system.
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homogeneous assets in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment.
Write-off policy
The bank writes off a loan/security balance (and any related allowances for impairment losses) when the Credit department determines that the loans are uncollectible. This determination is reached after considering information such as the occurrence of significant changes in the borrowers financial position such that the borrower can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. For smaller balance standardised loans, charge off decisions generally are based on a product specific past due status.
Collateral held
The bank holds collateral against loans and advances to customers in the form of cash, mortgage interests over property, other registered securities over assets, and guarantees. Estimates of fair value are based on the value of collateral assessed at the time of borrowing, and generally are not updated except when a loan is individually assessed as impaired. Collateral generally is not held over loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activity. Collateral usually is not held against investment securities, and no such collateral was held at 31 December 2008 . An estimate of the fair value of collateral and other security enhancements held against financial assets is shown below: Loans and advances to customers 2008 GH Against individually impaired Property Other Against past due but not impaired Property Other Against neither past due nor impaired Property Other Total 3,435,057 426,117 2007 GH 690,400 391,327
5,848,451 886,908
1,187,797 158,657
Concentrations of risk The bank monitors concentrations of credit risk by sector. An analysis of concentrations of credit risk at the reporting date is shown below:
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Analysis by business segment Transport, storage & communication Agriculture, forestry & fishing Manufacturing Construction Commerce & finance Services Staff Miscellaneous Gross loans and advances Less provision for impairment: Impairment allowance 3,076,488 23,718,338 44,873,695 19,284,228 45,595,274 27,024,800 3,940,875 3,683,287 171,196,985
2008 % 1.80 13.85 26.21 11.26 26.63 15.79 2.30 2.15 100.00 3,692,480 13,389,302 24,983,300 11,336,833 32,465,055 18,092,196 3,444,559 4,589,819 111,993,544
2007 % 3.30 11.96 22.31 10.12 28.99 16.15 3.08 4.10 100.00
(9,284,083) 161,912,902
(4,270,082) 107,723,462
(b) Off balance sheet items (letters of credit and guarantees) 2008 GH Transport, storage & communication 335,610 Agriculture, forestry & fishing 280,373 Manufacturing 5,307,362 Construction 10,298,519 Commerce & finance 17,119,913 Services 3,889,704 Miscellaneous 3,294,285 40,525,766
Settlement risk
The banks activities may give rise to risk at the time of settlement of transactions and trades. Settlement risk is the risk of loss due to the failure of a company to honour its obligations to deliver cash, securities or other assets as contractually agreed. For certain types of transactions the bank mitigates this risk by conducting settlements through a settlement/clearing agent to ensure that a trade is settled only when both parties have fulfilled their contractual settlement obligations. Settlement limits form part of the credit approval/limit monitoring process described earlier. Acceptance of settlement risk on free settlement trades requires transaction specific or counterparty specific approvals from the banks risk function.
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The table below analyses assets and liabilities into relevant maturity groupings based on the remaining period at 31 December 2008 to the contractual maturity date: As at 31 December 2008 Assets Cash and balances with BoG Treasury bills and other eligible bills Due from other banks Loans and advances to customers Investments in associated companies Property and equipment Intangible Assets Other assets Tax Total assets Up to 3 Months 26,867,807 8,845,535 25,107,618 60,390,305 713,587 3,893,746 125,818,598 Up to 3 Months 53,909,079 37,530,417 4,951,130 12,274,137 108,664,763 17,153,835 3-6 Months 5,093,699 33,661,367 269,330 4,493,501 43,517,896 3-6 Months 21,292,031 3,261,798 16,290,939 40,844,768 2,673,129 6-12 months 6,061,468 32,284,305 1,133,089 3,103,042 14,327 42,596,231 6-12 months 18,361,233 1,206,773 19,568,006 23,028,225 Over 1 year 3,409,354 35,576,925 202,000 1,885,028 41,073,307 Over 1 year 46,122,228 8,404,012 54,526,239 (13,452,933)
Total 26,867,807 23,410,056 25,107,618 161,912,902 202,000 2,867,944 1,133,089 11,490,288 14,327 253,006,03
Liabilities Due to financial & other inst. Due to customers Other borrowed funds Interest payable & other liabilities Total liabilities Net liquidity gap As at 31 December 2007 Total assets Total liabilities Net liquidity gap
ii) Liquidity risk (continued) The previous table shows the undiscounted cash flows on the banks financial liabilities and unrecognised loan commitments on the basis of their earliest possible contractual maturity. The banks expected cash flows on these instruments vary significantly from this analysis. For example, demand deposits from customers are expected to maintain a stable or increasing balance; and unrecognised loan commitments are not all expected to be drawn down immediately. The gross nominal inflow/(outflow) disclosed in the previous table is the contractual, undiscounted cash flow on the financial liability or commitment.
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Amount
Profit Before Tax Adjusted Core Capital Adjusted Total Capital Risk Weighted Assets (RWA) Adjusted Core Capital to RWA Adjusted Total Capital to RWA
Scenario 2 5% Increase in Net int. margin 13,790,912 18,968,805 30,187,298 194,643,044 9.75% 15.51%
5% Decrease in Net int. margin 12,477,492 17,818,799 28,357,157 176,105,612 10.12% 16.10%
Assuming no management actions, a series of such rises would increase net interest income for 2008 by GH 656,710.00, while a series of such falls would decrease net interest income for 2008 by GH 656,710.00. Also a series of such rises would decrease the adjusted core capital to RWA and Adjusted total capital to RWA by 0.22% and 0.35% respectively, while a series of such falls would increase the adjusted core capital to RWA and Adjusted total capital to RWA by 0.15% and 0.24% respectively. Both the revised capital ratios are well above the minimum capital requirement of 8% and 12% respectively.
Concentration of assets, liabilities and off balance sheet items (currency risk)
The Bank takes on exposure to effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The table below summarises the Bank's exposure to foreign currency exchange rate risk at 31 December 2008. Included in the table are the Bank's assets, liabilities and off balance sheet items at carrying amounts categorised by currency. The amounts stated in the table are the cedi equivalent of the foreign currencies.
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As at 31 December 2008 USD Assets Cash and bal. with BoG 4,314,672 Treasury bills and other eligible bills Due from other banks 15,211,226 Loans and advances to customers 19,632,456 Investments in associated companies Property, plant and equipment Intangible assets Other assets 458,541 Tax asset Total assets 39,616,895 Liabilities Due to financial and other institutions Due to customers Other borrowed funds Interest payable and other liabilities Total liabilities
OTHERS -
TOTAL 26,867,806 23,410,056 25,107,619 161,912,902 202,000 2,867,944 1,133,089 11,490,288 14,327 253,006,031
Net on bal. sheet position 9,157,305 Net off bal. sheet position Credit commitments 18,104,090 As at 31 December 2007 Total assets 43,284,171 Total liabilities 32,339,003 Net on bal. sheet position 10,945,168 Net off balance sheet position Credit commitments 1,039,950
801,555
8,101,828
9,141,778
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Foreign exchange risk - Appreciation/depreciation of GH against other currencies by 10%. The foreign exchange risks sensitivity analysis is based on the following assumptions: Foreign exchange exposures represent net currency positions of all currencies other than other than Ghana Cedis. The currency risk sensitivity analysis is based on the assumption that all net currency positions are highly effective. The base currency in which the banks business is transacted is Ghana Cedis. The table below sets out the impact on future earnings of an incremental 10% parallel fall or rise in all foreign currencies at the beginning of each quarter during the 12 months from 1 January 2008. Assuming no management actions, a series of such rise and fall would impact the future earnings and capital as illustrated in the table below; Amount Scenario 1 Scenario 2 GH 10% appreciation 10% depreciation 31-Dec-08 Of GH Of GH Profit Before Tax 13,134,202 12,520,000 13,748,404 Adjusted Core Capital 18,475,509 17,861,307 19,089,711 Adjusted Total Capital 29,402,258 28,788,056 30,016,460 Risk Weighted Assets (RWA) 185,374,327 166,836,894 203,911,760 Adjusted Core Capital to RWA 9.97 10.71 9.36 Adjusted total Capital to RWA 15.86 17.26 14.72 Assuming no management actions, a series of such appreciation would decrease earnings for 2008 by GH614,202. while a series of such falls would increase earnings for 2008 by GH614,202. Also a series of such rises would increase the adjusted core capital to RWA and Adjusted total capital to RWA by 0.01% and 0.01%, while a series of such falls would decrease the adjusted core capital to RWA and Adjusted total capital to RWA by 0.01%. Both the revised capital ratios are well above the minimum capital requirement of 8% and 12% respectively.
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requirements for appropriate segregation of duties, including the independent authorisation of transactions requirements for the reconciliation and monitoring of transactions compliance with regulatory and other legal requirements documentation of controls and procedures requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified requirements for the reporting of operational losses and proposed remedial action development of contingency plans training and professional development ethical and business standards risk mitigation, including insurance where this is effective. Compliance with the banks standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal Audit reviews are discussed with the management of the business unit to which they relate, with summaries submitted to the Audit Committee and senior management of the bank.
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Tier 2 capital, which includes capitalised revaluations reserves; latent revaluation reserves; undisclosed reserves; revaluation reserves; sub-ordinated loans and hybrid capital subject to a limit of 100% of Tier 1 capital. The banks policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders return is also recognised and the bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.
6. Critical accounting estimates and judgements in applying the bank's accounting policies
In the process of applying the banks accounting policies, management has made estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. These are dealt with below:
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Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.
(ii) Categorisation Available for sale financial assets Loans and receivables
2,949,102 35,231,992 38,181,094 2008 472,373 6,004,485 7,712,445 14,189,303 2008 1,582,241 2,187,391 3,045,668 6,815,300
2,755,771 20,910,671 23,666,442 2007 338,733 2,268,496 4,220,859 6,828,088 2007 1,298,349 1,667,471 1,999,492 4,965,312
8. Interest expense Current accounts Time and other deposits Overnight and call accounts
9. Fees and commission income Account service charges Transfers & letters of credit issued Other Total fees and commission income
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10. Fees and commission expense Inter-bank transaction fees 11. Other operating income Foreign exchange gains less losses Other income
430,616 52,422 483,038 2008 10,701,503 1,567,366 1,031,293 142,316 5,549,450 503,484 160,143 28,200 19,683,755 2008 8,999,817 528,251 1,173,435 10,701,503
303,733 1,831,091 2,134,824 2007 7,851,839 995,889 606,764 116,452 3,512,409 162,416 82,400 28,760 13,356,929 2007 6,574,155 528,389 749,295 7,851,839
12. Operating expense Staff costs (note 13) Depreciation (Note 23 & 24) Advertisements and marketing Professional services Administrative expenses Training Directors' remuneration Auditors' remuneration
13. Staff costs Wages and salaries Social Security Fund contribution Others
The average number of persons employed by the Bank during the year was 329 (2007: 297). 14. Impairment loss Portfolio impairment Specific impairment 2008 2,070,530 2,481,278 4,551,808 2007 739,139 1,191,362 1,930,501
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Held-tomaturity investments -
Cash and balances with BoG Treasury bills and other eligible bills Due from other banks Loans and advances to customers Investments in associated companies Total at 31/12/07
20,966,254 -
Due to financial and other institutions Due to customers Other borrowed funds Total at 31/12/08
Financial liabilities at Total fair values carrying through P&L amounts 53,909,079 123,305,910 17,823,712 195,038,701
Due to financial and other institutions Due to customers Other borrowed funds Total at 31/12/07
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The tax on the operating profit differs from the theoretical amount that would arise using the basic tax rate as follows: 2008 2007 Profit before tax 13,134,202 10,469,812 Prima facie tax calculated at a tax rate of 25% (2007: 25%) 3,283,551 2,617,453 Tax effect of: Income not subject to tax (3,109,489) (2,061,034) Expenses not deductible for tax purposes 3,515,445 1,904,162 Income subject to different tax rates (115,709) Tax charge 3,573,798 2,460,581
17 Cash and balances with Bank of Ghana Cash in hand Balances with Bank of Ghana
Balances with Bank of Ghana includes a mandatory reserve deposit of GH12.19million (2007: GH6.66 million). These funds are not available to finance the Bank's day to day operations and do not attract interest. 18 Treasury bills and other eligible bills Bank of Ghana bills - 91 days Bank of Ghana bills - 182 days Bonds 2008 152,813 6,515,432 16,741,810 23,410,056 2007 369,815 581,645 20,014,794 20,966,254
Treasury bills and other eligible bills are debt securities issued by the Bank of Ghana for a term of three months, six months or a year. Bills are carried at their face value less unearned interest. The bonds are two and three year fixed and floating rate instruments.
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19 Due from other banks Items in the course of collection from other banks Placements with other banks
2008 19,376,643 5,730,975 25,107,618 2008 151,093,341 16,162,769 3,940,875 171,196,985 (9,284,083) 161,912,902
2007 14,900,750 14,027,610 28,928,360 2007 99,258,237 9,290,748 3,444,559 111,993,544 (4,270,082) 107,723,462 2007
20 Loans and advances Analysis by type of customer Private enterprises Individuals Staff Gross loans and advances Less provision for impairment: Impairment allowance
Analysis by business segment Transport, storage & communication Agriculture, forestry & fishing Manufacturing Construction Commerce & finance Services Staff Miscellaneous Gross loans and advances Less provision for impairment: Impairment allowance
2008 3,076,488 23,718,338 44,873,695 19,284,228 45,595,274 27,024,800 3,940,875 3,683,287 171,196,985 (9,284,083) 161,912,902
3,692,480 13,389,302 24,983,300 11,336,833 32,465,055 18,092,196 3,444,559 4,589,819 111,993,544 (4,270,082) 107,723,462
Analysis by type of advance Overdrafts Term loans Gross loans and advances Less provision for impairment: Impairment allowance
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21 Movement in provisions for impairment are as follows: Balance at 1 January Net recoveries and write offs Net increase in provision Balance at 31 December
2008 4,270,082 462,193 4,551,808 9,284,083 % 5.80 6.92 63.88 2008 202,000 202,000
2007 3,060,991 (721,410) 1,930,501 4,270,082 % 4.12 3.85 61.90 2007 245,125 (43,125) 202,000
Loan loss provision ratio Gross non-performing loans ratio Ratio of 50 largest exposures 22 Investment in associated companies Balance at 1 January Disposals Balance at 31 December The associated companies are: Nature of business Credit guarantee cover to financial institutions and other credit awarding agencies Leasing
2,000,000
31
All associated companies are incorporated in Ghana. The Bank disposed off its equity holdings in Horizon Finance & Leasing Company Limited.
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23 Property, plant & equipment Computers Cost Balance at 1 Jan. Additions Transfers 1,251,726 587,600 Furniture & fittings 2,723,022 1,184,553 3,907,575 Motor vehicles 463,359 216,640 679,999 Leasehold Capital work land in progress 146,655 146,655 8,176 (8,176) Total 4,592,938 1,988,793 (8,176) 6,573,555
Balance at 31 Dec. 1,839,326 Depreciation Balance at 1 Jan. 1,155,841 Charge for the year 254,483 Balance at 31 Dec. 1,410,324 Net Book Value At 31 Dec. 2008 At 31 Dec. 2007 429,002 95,885
2,040,209 1,367,518
255,166 113,091
143,568 145,049
8,176
2,867,945 1,729,719
24. Intangible assets Cost Balance at 1 January Additions Balance at 31 Dec. Amortisation Balance at 1 January Charge for the year Balance at 31 Dec. Net Book Value At 31 Dec. 2008 At 31 Dec. 2007 This relates to the cost of purchased software.
1,133,089 1,684,310
1,133,089 1,684,310
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Profit on disposal of property, plant & equip. Property & equip. 2008 2007 163,274 (45,755) 117,519 (536,559) (419,040) Shares 2008 2007 43,125 4,895 48,020 (1,255,299) (1,207,279)
Cost of assets Accumulated depreciation/valuation gain Net book value Sale proceeds Profit on disposal of assets 25. Other assets Accounts receivable and prepayments Accrued income Others
26. Due to customers 2008 Analysis by business Corporate customers: Current/settlement accounts Term deposits Small and medium sized enterprises: Current/settlement accounts Term deposits Retail customers: Current/settlement accounts Term deposits 2007
50,315,538 10,934,738 37,854,717 3,650,026 20,235,176 315,716 123,305,910 2008 82,718,143 14,900,480 20,818,806 4,868,481 123,305,910
41,883,395 11,572,577 35,243,895 3,753,642 17,157,465 163,590 109,774,564 2007 71,360,101 15,489,809 17,932,601 4,992,053 109,774,564
Due to customers - continued Analysis by product Current accounts Time deposits Savings Others
Analysis by type of depositors Financial institutions Individuals and other private enterprises Public enterprises
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27. Other borrowed funds FMO, SECO, SIFEM and EDIF Cedi loans SIFEM Dollar loan Analysis of borrowings Amount due within one year Amount due between two and five years
Other borrowed funds represents amounts advanced to the Bank by FMO of Netherlands, one of its shareholders, Swiss Secretariat for Economic Affairs (SECO), SIFEM and Export Development and Investment Fund (EDIF) to enable the Bank to provide credit to small and medium scale private enterprises. 28. Interest payable and other liabilities Creditors Accruals Other liabilities 2008 23,810,855 2,765,496 1,988,723 28,565,075 2007 24,395,712 1,642,629 15,830,787 41,869,128
2,020,131
1,585,370
Payment of dividend is subject to the deduction of withholding tax at a rate of 8%. Dividend income tax Balance 01/01/08 76,299 76,299 Provision for the year Payments during the year (76,299) (76,299) Balance 31/12/08 -
2007 2008
30. Reconciliation of movement in capital and reserves Income Stated Surplus Capital Account Balance at 1 January 2007 7,000,000 1,298,698 Total recognised income & expense 8,009,231 Transfer (from)/to reserve (2,002,308) Impairment (343,435) Balance at 31 Dec. 2007 7,000,000 6,962,187
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Balance at 1 January 2008 Total recognised income and expense Transfer (from)/to reserve Dividends to equity holders Impairment Balance at 31 Dec.2008
7,000,000 7,000,000
31. Statutory reserve fund At beginning of year Transfer from income surplus account At end of year
The statutory reserve fund represents the cumulative amount set aside from annual net profit after tax as required by Section 29 of the Banking Act, 2004 (Act 673). The proportion of net profits transferred to this reserve ranges from 12.5% to 50% of net profit after tax depending on the ratio of the existing statutory reserve fund to paid up capital. 32. Stated capital 2008 Number of Amount Shares '000 GH 100,000 2007 Number of Amount Shares '000 GH 100,000
10,000 10,000
7,000,000 7,000,000
10,000 10,000
7,000,000 7,000,000
There is no unpaid liability on any shares and there are no shares in treasury. There are no calls or instalments unpaid. 33. Other reserves The other reserve is not distributable and represents the excess of loan provisions computed in accordance with Bank of Ghana prudential guidelines over the impairment of loans and advances arrived at in accordance with IAS 39. 34. Cash and cash equivalents For the purpose of the cash flow statement, cash equivalents comprise balances with less than 91 days maturity from the date of acquisition, including cash and balances with Bank of Ghana, treasury bills and other eligible bills, amounts due from and to other banks and dealing securities.
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Cash and balances with Bank of Ghana (Note 17) 91-day treasury bills (Note 18) Due from other banks (Note 19) Due to financial institutions
35. Off balance sheet financial instruments, contingent liabilities and commitments In common with other banks, the Bank conducts business involving acceptances, guarantees, performance bonds and indemnities. The majority of these facilities are offset by corresponding obligations of third parties. 36. Contingent liabilities Commercial letters of credit outstanding Guarantees and indemnities outstanding 2008 20,275,903 20,249,863 40,525,766 2007 14,782,171 6,482,494 21,264,665
Nature of contingent liabilities An acceptance is an undertaking by a Bank to pay a bill of exchange drawn on a customer. The Bank expects most acceptances to be presented, but reimbursement by the customer is normally immediate. Letters of credit commit the bank to make payments to third parties, on production of documents, which are subsequently reimbursed by customers. Guarantees are generally written by a bank to support performance by a customer to third parties. The bank will only be required to meet these obligations in the event of the customer's default. 37. Commitments Undrawn formal stand-by facilities, credit lines and other commitments to lend 2008 6,555,100 2007 32,933,411
Nature of commitment Commitments to lend are agreements to lend to a customer in future subject to certain conditions. Such commitments are normally made for a fixed period. The Bank may withdraw from its contractual obligation for the undrawn portion of agreed overdraft limits by giving reasonable notice to the customer.
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38. Country analysis The amount of total assets and total liabilities held by the Bank inside and outside Ghana is analysed below: 2008 2007 Outside Outside In Ghana Ghana In Ghana Ghana Assets Cash and balances with Bank of Ghana 26,867,806 45,165,840 Treasury bills and other eligible bills 23,410,056 20,966,254 Due from other banks 5,730,975 19,376,643 14,027,610 14,900,750 Loans and advances to customers 161,912,902 107,723,462 Investments in associated companies 202,000 202,000 Property and equipment 2,867,945 1,729,719 Intangible Assets 1,133,089 1,684,310 Other assets, including tax assets 11,490,289 14,387,676 Taxation 14,327 Total assets 233,629,388 19,376,643 205,886,871 14,900,750 Liabilities Due to financial and other institutions Due to customers Other borrowed funds Interest payable and other liabilities Tax Total liabilities
39. Related party transactions The Bank is controlled by Social Security and National Insurance Trust (SSNIT) with 61.11% of the issued shares. A number of banking transactions are entered into with related parties in the normal course of business. These include loans, deposits and foreign currency transactions. These transactions were carried out on commercial terms and at market rates. The volumes of related party transactions, outstanding balances at the year end, and related expenses and income for the year are as follows: i Deposits from Ghana Reinsurance Deposits at 1 January Deposits received during the year Deposits repaid during the year Deposits at 31 December Interest expense on deposits Rent paid during the year ii Loan Repayment - FMO Loan repaid 2008 1,943,384 1,269,618 (2,117,341) 1,095,661 190,443 532,725 2007 6,060,907 (4,117,523) 1,943,384 241,749 517,992
210,416
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iii
Deposits from SSNIT Deposits at 1 January Deposits received during the year Deposits repaid during the year Deposits repaid during the year Interest expense on deposits Rent paid during the year
40. Social responsibilities An amount of GH72,300 was spent on fulfilling the social responsibility of the Bank (2007: GH129,443). 41. Segmental reporting Business line information is presented in respect of the Bank's three main business lines, namely Financial Institutions and Money Market (FIM), Medium Enterprises and Corporates (MEC) and Commercial and Consumer Banking (CCB). The Bank's other business deals with Retail Banking and Funds Transfer (RBFT). Direct costs where they are easily identifiable are charged directly to these business lines and indirect costs are centrally managed and standardised basis used to re-allocate such costs to the business lines on a reasonable basis. Business Line Net interest income Non funded income Operating income Operating expenses FIM 3,382,735 3,552,778 6,935,513 (4,230,964) MEC 12,674,370 4,797,528 17,471,898 (4,034,829) CCB 6,918,898 4,214,826 11,133,724 (11,031,942) OTHER 1,015,789 812,841 1,828,630 (386,021) TOTAL 23,991,791 13,377,974 37,369,765 (19,683,755)
Operating profit before impairment, Losses and taxation 2,704,549 Impairment loss (6,208) Operating profit Other income Profit before taxation Taxation - corporate tax Profit after taxation Total assets Total liabilities Total shareholders funds 2,698,341 2,698,341 2,698,341 32,835,333 32,835,333
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GAS GH IFRS GH IFRS GH Effect of Transition to IFRSs GH 1st January 2007 27,071 50,915 65,502 143,487 69,583,455 245,125 2,667,503 3,862,072 123,185,661 107,380,027 202,000 3,414,029 13,625,204 219,676,152 20,551,335 11,218,402 20,960,691 28,928,360 15,057,770 45,165,840 5,563 343,436 762,472 1,111,470 Effect of Transition to GAS GH IFRSs GH 31st December 2007 15,057,770 20,524,265 11,218,402 69,532,540 245,125 2,667,503 3,796,570 123,042,174 45,165,840 20,966,254 28,928,360 107,723,463 202,000 3,414,029 14,387,676 220,787,622 65,502 65,502 22,955,338 70,825,193 1,768,247 13,735,601 88,549 109,372,928 42,262,095 109,774,564 4,534,126 41,106,656 598,164 198,275,604 762,472 762,472 42,262,095 109,774,564 4,534,126 41,869,128 598,164 199,038,076
Balance Sheet
Note
Assets Cash and balances with BoG Treasury bills and other eligible bills a. Due from other banks Loans & advances to customers b. Investments in associated companies Property & equipment Other assets c. Total assets
LIMITED
Liabilities Due to financial & other institutions 22,955,338 Other deposits Due to customers 70,825,193 Other borrowed funds 1,768,247 Interest payable & other liabilities c. 13,670,100 Tax payable 88,549 Total liabilities 109,307,427
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7,000,000 1,298,696 5,436,051 13,734,747 77,986 13,812,733 21,400,546 348,998 21,749,545 50,915 27,071 7,000,000 1,349,611 27,071 5,436,051 7,000,000 6,962,187 7,438,359 348,998 7,000,000 7,311,185 7,438,359 123,042,174 143,487 123,185,661 219,676,150 1,111,470 220,787,622
Shareholders Funds Stated capital Income surplus account a. Other reserves a,b Statutory reserve fund d.
Notes
(a) Available-for-sale financial asset have in accordance with IFRS been measured at fair value. In stating these assets at fair value, the effect is an increase in the value of Treasury and other eligible bills and Other reserves by GH27,071 for 2006 and GH5,563 for 2007 respectively.
(b) Provisions for bad debt under GAS were computed based on past due days as set out in Bank of Ghana's guidelines. 1% general provision is also required for contingent liabilities. Under IFRS an impairment loss evaluation is required and this is done by calculating the present value of estimated future cash flows and comparing these with the carrying amounts of the loans advances and a provision to cover inherent risk of losses in loan portfolios. This has caused an increase in loans and advances by GH50,915 for 2006 and GH343,436 for 2007.
(c) Staff loans under GAS are stated at cost and interest outstanding. Under IFRS the present value of all future cash receipts are discounted using the prevailing market rates of interest for a similar instrument with similar credit rating. Since staff will inturn render their services to the bank in the future, the discounted is treated as an asset and spread over the duration of the loan. This has caused an increase in both other assets and liability of 65,502 for 2006 and 762,472 for 2007.
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(d) The effects of the above adjustments on equity is as follows: Income Surplus Note Impairment loss Statutory reserve transfer Total adjustment to equity Other reserves Mark to market on available for sale securities Impairment loss Total adjustment to equity Reconciliation of profit b.
a. b.
27,071 50,915 77,986 2007 Effect of Transition to IFRS GH 563,623 563,623 (414,729) 148,894 23,117 197,069 (71,292) (71,292)
Interest income Interest expense Net interest income Commissions and fee income Other operating income Operating income Operating expenses Bad and doubtful debts expense Profit before tax Tax Profit after taxation
Note e.
IFRS GH 23,666,443 6,828,088 16,838,355 4,877,465 4,041,424 25,757,244 13,356,930 1,930,500 10,469,814 2,460,581 8,009,233
f.
g. h.
(f) Facilities fees under GAS were recognised in fees and commissions income when the facility is granted. With IFRS facility fees on facilities are spread over the life of the facility, thus the initial charge moved from commissions and released yearly into commissions. As a result of this, an amount of 414,729 for year 2007 has been deferred. (e,g)As a result of the concessionary rates given to staff on loans granted, under IFRS these discounts are recognised as assets to be spread over the duration of the loan. This has given rise to an increase in both interest income and operating expenses of 23,117 for the year 2007 h) Under IFRS interest in suspense are written back into income as impairment charge is made against facilities that are deemed impaired. This has resulted in an adjustment of 197,069 both in interest income and bad debts expense.
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TTB NETWORK
HEAD OFFICE Reinsurance House 68 Kwame Nkrumah Avenue P. O. Box 1862 Accra Tel.: +233 - 21- 24004952 Fax.: +233 21- 240056/9 Swift: TRBLGHAC Website: www.thetrustbank.com.gh E-mail: [email protected]
MADINA Old Road Taxi Rank, Near Randy Pharmacy, Madina, Accra Tel: +233 - 21- 513321/2 Fax: +233 - 21- 513321
KUMASI - HARPER ROAD SSNIT Building, Adum, Kumasi Tel: +233 - 51 - 21416/7 Fax: +233 - 51 - 29254
LIST OF BRANCHES & LOCATION ACCRA MAIN Reinsurance House, 68 Kwame Nkrumah Avenue, Adabraka, Accra Tel:+233 - 21- 230416/5, 230403/7 Fax: +233 - 21- 240056 SAKUMONO Ocean Waves Hotel, Near Sakumono Mobil Service Sta. Sakumono, Accra Tel: +233 - 22 - 413617/8 Fax: +233 - 22 - 413622 KUMASI Suame - Magazine Suame - Offinso Road, Kumasi Tel: +233 - 51-30229 Fax: +233 - 51- 27232
OKOFO HOUSE Kwame Nkrumah Avenue, Near Total Filling Station, Adabraka, Accra Tel:+233 - 21-243621/244835 Fax:+233 - 21-254693
TEMA MAIN Hospital Road, Comm. 11 Junction, Tema Tel: +233 - 22 - 308439/40 Fax: +233 - 22 - 308460
KUMASI - ASHTOWN Dr. Mensah Traffic Light Ashtown, Kumasi Tel : +233 - 51 - 80552/6 Fax: +233 - 51 - 80699
TRUST TOWERS Sabukwe Road (Farrar Avenue), Accra Tel: +233 - 21-238386 Fax: +233 - 21-238387
TEMA COMMUNITY 1 Near TFS Building, Community 1, Tema Tel: +233 - 22 - 213705/6 Fax: +233 - 22 - 213707
GENERAL POST OFFICE Opposite General Post Office Accra Central Tel: +233 - 21- 673083/97 Fax: +233 - 21- 673108
TESANO Near GT University College, Tesano, Accra Tel. : +233 - 21-237317 Fax. : +233 - 21-237316
KASOA Bawjiase Road, Kasoa Tel: +233 - 21 - 862886/7 Fax: +233 - 27 - 7611988
KWASHIEMAN Near Kwashieman Footbridge (Overhead) Kwashieman, Accra Tel: +233 - 24 - 4341762/3
KANTAMANTO Tarzan House, Near Hotel De Horses, Kantamanto, Accra Tel: +233 - 21- 678243/5 Fax: +233 - 21- 678246
BUDUMBURAM Opp. Budumburam Refugee Camp, Budumburam. Tel: +233 - 21 - 910119 Fax: +233 - 24 - 4332569
KISSEIMAN Near JB Plaza Along Christian Village - GIMPA Rd. Accra Tel: +233 - 24 - 4341764/5
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